As a 27-year-old millionaire building his second company, Brian Robertson, while perhaps typical in new economy circles, brings a unique swagger in the traditional mortgage industry.
After attending Massachusetts Institute of Technology, creating and selling one company, and then serving as an executive for Amazon.com, Mr. Robertson, now chief executive officer of Visible Markets, is seeking to revolutionize the bond trading market, which remains predominantly a fax-and-phone world.
In 1996, Mr. Robertson and a friend left consulting jobs at the Mitchell Madison Group to develop software to help college friends stay in touch after graduating.
The result, Planet All, was a hit. Just two years later the partners sold their company to Amazon.com for $100 million, making Mr. Robertson a multimillionaire at the age of 25. He went on to become a group manager at Amazon.com, helping the company to build its online toy business.
But his entrepreneurial instinct remained. In the fall of 1999, Mr. Robertson attended a friend's bachelor party in Boston. The friend, Sam Choi, was a bond trader for Lehman Brothers in New York, and that piqued Mr. Robertson's interest. After bombarding Mr. Choi with questions about how bond markets work, Mr. Robertson smelled an opportunity.
What emerged from this discussion was a theory that bond trading could be made more practical and more profitable for investors if it were done online, with prices available for all parties to see.
By November, Mr. Robertson and Mr. Choi had left their jobs and were on their way to starting Visible Markets. Mr. Choi is the chief operating officer.
The year-old company runs a marketplace where investors can trade mortgage-backed, asset-backed, and corporate bonds in an auction format. Traders are anonymous and prices are visible to all who want to bid. Normally, investors have no say in the prices, which are set by Wall Street dealers.
Transparent prices are a another distinct departure from traditional Wall Street bond trading, where dealers broker sales and essentially set their own purchase and sale prices, meaning they can take large spreads on trades. In short, Visible Markets' way of operating is heresy to Wall Street's method of bond trading.
With $1 billion of bonds successfully traded on the Visible Markets platform between its launch on June 26, 2000, and early December, the company hopes to continue its growth in 2001.
And though Visible Markets has made gains in its short lifetime, the jury is still out on whether the company will succeed or get washed out to sea with the other dot-coms that have seen trouble in recent months.
The mortgage industry remains a staid, traditional crowd, and bond traders have proved hesitant to change the way they communicate about and seal six-figure deals.
"It's a risky proposition," said one Wall Street bond trader, who spoke on request that his name not be used. "I think that they face the same challenges that all the Internet companies face right now."
Internet businesses in and of themselves, the trader said, without the sponsorship of a brick-and-mortar business, have not done well. "Their prospects are dimmer now that the Nasdaq is trading in the doldrums, which bodes poorly for Internet firms," he said. "Visible Markets could survive, but I think the time is running out on companies whose only product is an Internet platform."
Nonetheless, by all accounts, Mr. Robertson's experience in setting up shop with Planet All and Amazon.com have also proven valuable in getting Visible Markets off the ground.
He has borrowed a number of pointers from Amazon.com, such as emphasizing good customer service. Visible Markets has 15 employees exclusively dedicated to helping traders use its site.
Further, Visible Markets is seeking to replicate Amazon's practice of creating a community of users by seeking their input. Amazon.com, for example, encouraged user-generated content such as book reviews from visitors to the site, which kept them coming back for more.
Mr. Robertson said Visible Markets will soon allow users to comment on current and past auctions on his company's site, which he said will make the site more valuable to them.
Amazon.com also provides a recommendation feature for its books; for each book, the site lists several others with similar characteristics that might interest the buyer. Similarly, Visible Markets plans to introduce as early as next week a feature it calls rich search. If an investor likes a particular type of bond, the feature gives information about other bonds available for sale in Visible Markets' exchange that have similar features.
In addition to the enhancements to his business model, Mr. Robertson credits his experiences with teaching him how to raise venture capital.
Bill Kaiser, a general partner at Greylock Management in Boston which gave Visible Markets $12 million in venture capital funding last February, said Mr. Robertson has some powerful assets.
First, Mr. Robertson picks up new information at a speed fitting for the digital age, Mr. Kaiser said. "This is a guy who didn't know how to spell the word bond, and he was completely self-taught about the bond market," he said. "I've watched him go toe-to-toe with experienced, 20-year fixed income guys without missing a beat."
But the venture capitalist also said that Mr. Robertson demonstrated good survival instincts by being quick to the draw in an emerging market. Mr. Robertson, he noted, had Visible Markets up and running - with its own proprietary trading network built from scratch - within a year.
"Let's face it, a lot of his competitors or would-be competitors are very well-financed and deep-pocketed exchanges that are backed by some of the biggest names on the Street," he said. "You'd better be nimble in that kind of environment, otherwise you're going to get run over."
Craig Emrick, a senior vice president with Boston-based State Street Corp.'s Global Markets group, which invested in Visible Markets in the fall of 2000, said the company has a good business model and has been able to deliver on it.
In addition, Mr. Kaiser said that because Visible Markets does not have to protect any bond market franchise, call base, or fat profit margins on bond trading spreads, as traditional Wall Street dealers do, it keeps its customers' interest more in mind.
Building its online exchange technology from scratch also gives Visible Markets a leg up on the competition, Mr. Kaiser said.
"I love what I'm doing," Mr. Robertson said. "We're going to be around for awhile. We're building a business that's clearly in a marketplace that is transforming hugely, and I'm excited to be a part of that."
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